Stay informed with free updates
Simply sign up to the Chinese economy myFT Digest — delivered directly to your inbox.
China’s economy remained mired in deflation last month, official data showed on Wednesday, highlighting the challenge for policymakers eager to boost domestic demand as trade tensions escalate with the US.
Consumer prices fell 0.3 per cent year-on-year in September, marginally lower than anticipated by economists forecast in a Reuters poll. This follows a 0.4 per cent drop in August. The figures have been positive for only two months of this year.
The producer price index, which has been in negative territory for the past three years, declined 2.3 per cent.
Persistently negative data is driving concerns over the strength of consumer demand in the mainland.
Consumers have been reluctant to spend since the end of the Covid-19 pandemic while government support measures have struggled to offset the impact of a four-year property slowdown.
China’s Golden Week holiday at the start of October saw huge numbers of travellers but there were signs consumers were opting for cheaper alternatives. The government has launched trade-in programmes for consumer appliances and other goods to support spending but falling home prices have weighed on confidence.
Inflation data will add to concerns about overcapacity across the vast industrial sector.
President Xi Jinping has spearheaded a campaign to cut down on neijuan, or “involution”, a term that refers to self-harming competition and is seen to afflict a wide range of sectors and businesses.
Factory activity has also contracted for the past six months, the longest decline in six years and a sign of pressure from a trade war with the US.
Tensions between Washington and Beijing have escalated in recent days after China said it would expand rare-earth controls and US President Donald Trump threatened to increase tariffs by 100 per cent.
